A sales ledger control account has an opening balance of £38,400. During the month: credit sales £212,600; cash received £198,300; discounts allowed £2,900; sales returns £5,100; irrecoverable debts written off £1,400; a customer's cheque for £600 was dishonoured. What is the closing balance?
Answer and explanation
Correct answer: B. £43,900
- Step 1: Debits (increase receivables): opening £38,400 + credit sales £212,600 + dishonoured cheque £600 = £251,600.
- Step 2: Credits (decrease receivables): cash £198,300 + discounts £2,900 + returns £5,100 + irrecoverable debts £1,400 = £207,700.
- Step 3: Closing balance = £251,600 − £207,700 = £43,900.
Answer
£43,900.
Why not the others: £42,700: This deducts the dishonoured cheque, but a dishonoured cheque increases the amount owed. £45,300: This leaves out the irrecoverable debts written off. £59,900: This adds discounts and returns, but they reduce the amount owed.
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